In the early morning, the Federal Reserve lowered the benchmark interest rate by 50 basis points. The United States officially announced a rate cut, and a 916-day rate hike cycle finally came to an end. At this moment, the rate cut that has been discussed countless times will have a great impact on the crypto market and what a big macro trend!
Then today, let's make it clear from the height, hardness, and length of the rate cut at one time:
The rate hike is easy to understand, which means that you will get more returns if you deposit 💰, and the rate cut will get less returns. It seems very simple, but what everyone is really concerned about is not the interest rate fluctuations, but the US dollar behind the fluctuations. In the past 20 years, the status of the US dollar has a slow downward trend, but nearly 60% of the world's foreign exchange reserves still exist in the form of US dollars, including the current currency circle and multinational bulk. It has to be admitted that the US dollar is still the most widely circulated and strongest currency, and no one can shake its position. Therefore, the flow of the US dollar and the relaxation or tightening will affect the global economic cycle. The only one who can decide whether to tighten or relax is the Federal Reserve, which we often say. Every 45 days, the Federal Reserve will control the global rhythm through interest rates.
Why is a rate cut good for the market?
It can be understood that the interest of keeping US dollars in the bank is getting lower and lower, causing most of the gold to leave the bank system and flow into the market. With less interest, the only function left is safekeeping, which is completely meaningless. It is better to use it to buy a house or a coin, or even spend it casually to gain emotional value, which is better than lying in the bank. So theoretically, the Fed's interest rate cut will increase the global liquidity. The greater the interest rate cut, the more money will flow in the market. As the liquidity of the market increases, production, consumption, and investment in the market will accelerate. This is why the coin took off after the announcement in the early morning, and it is also why I have repeatedly emphasized that it has reached the stage of holding currency some time ago.
Next is the election narrative!
